Do you believe history repeats itself? It has been my observation that sometimes it does and sometimes it doesn’t. But when you’re talking about money, it is probably a good idea to pay attention to what has happen in the past. Mr. Charles Hugh Smith in an article I found at www.financialsense.com thinks a major market low might be in the cards for October. History has taught us that the month of October can be a very volatile period. It is clear that some very important economic indicators, i.e. housing and interest rates are lining up to support an October surprise. I think you will find Mr. Smith’s short article interesting and worthy of your consideration.  

Coming to a Market Near You in October: Crash!
Charles Hugh Smith

Though history doesn't repeat, it does tend to echo, for the simple reason that history and markets are both expressions of human emotions. Emotions, of course, form a limited palette, and so the primary ones--for instance, greed, euphoria, panic and fear--get recycled as circumstances develop which trigger these responses.

What’s next for the markets?

According to the consensus forecasts, the U.S. economy is in robust shape and will continue to forge ahead at recent growth rates of around 3.5% for as far as the eye can see. Looking at the various big imbalances, we see an economy in very bad structural shape. There are really two key questions: first, soft or hard landing of the housing bubble? And second, is business fixed investment taking over from consumer spending as the economy's driver?

Is there a relationship between the price of gasoline and the value of your stock investments?

Early this morning I was reading a piece by Jim Puplava, a financial advisor in San Diego, CA. In his article Jim identifies the reason we have been paying gasoline pump prices near the “Katrina” price levels even though crude oil inventories are at the highest levels in about a year.

The answer to my question above is in the last sentence of Jim’s article.

I think you will find this very interesting.

Don't Blame Big Oil

Gasoline prices are going up and will reach new records by summer. This time it won’t be due to hurricanes, the war in Iraq, or greedy oil companies. The blame for higher gasoline prices rests with government policy. Let’s begin with the root cause of the current crisis. It began last summer with an energy bill that included a new ethanol mandate that will raise ethanol use to 7.5 billion gallons by 2012 beginning this year. In addition to requiring the use of ethanol in gasoline, Congress also refused to include liability protection for producers of MTBE. MTBE mandated by government has now become a target for trial lawyers. The result is that MTBE makers are pulling out of the market at a time ethanol production can’t meet the new demand mandated by Congress. So we are seeing gasoline inventories drawn down and gas supplies getting squeezed.